Falling rates, rising refinances: How to get the best deal

Mortgage rates fell again last week, although less dramatically than they did over the previous seven days. Still, this latest drop left some at their lowest levels since May 2013.

Unsurprisingly, this has created a surge in refinance applications, with the Mortgage Bankers Association reporting these jumping 23 percent just during weekending October 17 (the latest data available) to reach their highest level since November 2013. You might think even higher levels of refinancing activity are in the pipeline.

Current mortgage rates

The average for 30-year fixed-rate mortgages (FRMs) stood at 4.03 percent on October 24, down 2 basis points from its 4.05-percent level the previous week, according to HSH.com. Points for these fell to 0.11 from 0.13. That for 15-year FRMs fell more sharply, dropping 7 basis points to 3.29 percent from 3.36 percent, with points rising to 0.11 from 0.10.

The average rate for 30-year 1/1 adjustable-rate mortgages (ARMs) also fell: to 2.58 percent from 2.62 percent as average points for these inched down to 0.16 from 0.15. You'd have to go back many years to find that latest rate matched.

Securing the best refinance deal

Just because you have access to the best mortgage refinance rates in a very long time, that's no reason to duck getting the very best deal you can. Savings are savings, and the dollars you get to keep by shaving your rate are just as good as any others.

The fact you're here on the ShopRate.com site probably means you're going to do the obvious: shop around for the best deals, rather than just go with whatever your existing lender offers. But don't forget to obtain a number of quotes for your refinance (that goes for all-new home loans too), and to study each closely. There's a reason for that "devil in the detail" cliché.

But here are four more ways you can squeeze refinance rates down:

Think about going for an ARM. Of course, most economists still expect mortgage rates to go up sometime in the next year or so, and this is unlikely to make sense for those planning on staying in their home for decades. But if you're expecting to move in the next five, seven or 10 years, there's no point in paying a higher rate for payments fixed for 15 or 30 years. Just fix your initial ARM rate for as long as you need.

Consider a cash-in refinance. Borrowing less can shave your rate because it reduces your loan-to-value (LTV) ratio. You may also be able to buy points to reduce your rate.

Cut your term. If you can possibly afford a 15-year FRM, rather than one that lasts 30 years, you could save serious sums. Just look at the difference between the two in last week's rates.

Protect your creditworthiness. You may not have time to give your credit score a serious boost. But you can avoid doing it harm by holding off applying for any new credit (no store cards to take advantage of holiday offers, or auto loans because you'd like a new car in time for Christmas -- no new accounts at all) until your refinancing is complete.

Nobody knows what is going to happen to rates in the future. But it could well be that this is the last time we'll see such cheap borrowing for home loans. So you may well have to live for a very long time with the deal you strike now. It's so worth getting it right.